Sri Pericherla Shivakumar Raju, Hyderabad V. ITO, Ward 11(4), Hyderabad

ITA 396/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69773 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PHANI RAJU
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Unexplained cash credit
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 396/HYD/2013 ASSESSMENT YEAR : 2009-10 SRI PERICHERLA SHIVAKUMAR RAJU, APPELLANT HYDERABAD. (PAN AEWPP0982J) VS. INCOME TAX OFFICER, RESPONDENT WARD 11(4),HYDERABAD. APPELLANT BY : SHRI D.V. ANJANEYULU RESPONDENT BY : SHRI PHANI RAJU DATE OF HEARING : 04/07/2013 DATE OF PRONOUNCEMENT : 13/09/2013 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD, DATED 21/01/2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUND RAISED BY THE ASSESSEE PERTAINS TO TH E FOLLOWING TWO ISSUES: I) THE CIT(A) CONFIRMING THE ADDITION OF RS. 40, 60 ,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. II) THE CIT(A) TREATING AN AMOUNT OF RS. 7,50,000/- AND RS. 1,68,000/- AS INCOME FROM OTHER SOURCES OUT OF TO TAL INCOME OF RS. 1086,000/- SHOWN AS AGRICULTURAL INCO ME BY THE ASSESSEE. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 2 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL DERIVING INCOME FROM CONSULTANCY ON SALE AND PURCHASE OF LAN D. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED HIS RE TURN OF INCOME ON 12/01/2010 DECLARING TOTAL INCOME OF RS. 29,705/- APART FROM THE AGRICULTURAL INCOME OF RS. 10,86,000 /-. IN COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE AO ON EXAMI NING THE DETAILS SUBMITTED AND MATERIALS AVAILABLE ON RECORD , NOTICED THAT THE ASSESSEE DURING THE FY RELEVANT TO THE IMPUGNED ASSESSMENT YEAR HAD RAISED UNSECURED LOANS TO THE TUNE OF RS. 40,60,000/- FROM 33 PERSONS. THE AO WHEN ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF THE LOAN TRANSACTIONS BY ESTABLISHIN G THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS G ENUINENESS OF THE LOANS, THE ASSESSEE, IN RESPONSE, SUBMITTED CON FIRMATION LETTERS FROM THE LOAN CREDITORS. THE AO ON VERIFYIN G CONFIRMATION LETTERS NOTICED THAT LOANS ADVANCED WERE RANGING BE TWEEN AN AMOUNT OF RS. 50,000/- TO RS. 2,50,000/- AND ALL TH E LOAN AMOUNTS HAVE BEEN ADVANCED IN CASH. THE LOAN AMOUNT S HAVE BEEN ADVANCED IN THREE TO FIVE INSTALMENTS. NONE OF THE CREDITORS ARE EITHER INCOME-TAX ASSESSEES OR HAVING PAN. MOST OF THE LOAN CREDITORS ADMITTED INCOME FROM AGRICULTURAL SOURCES AND THE CONFIRMATION LETTERS SUBMITTED BEARS SAME HAND-WRIT ING. TO FURTHER VERIFY, THE GENUINENESS OF THE CREDITORS, T HE AO ISSUED SUMMONS U/S 131 TO ALL THE LOAN CREDITORS AND IN RE SPONSE TO THE SUMMONS ISSUED, LOAN CREDITORS APPEARED BEFORE THE AO AND THEIR STATEMENTS WERE RECORDED. THE AO AFTER ANALYZING ST ATEMENTS RECORDED FROM THE LOAN CREDITORS EXPRESSED HIS DOUB T WITH REGARD TO THE CREDITWORTHINESS OF THE LOAN CREDITORS AND A LSO GENUINENESS OF THE TRANSACTION AND, HENCE, ISSUED ANOTHER SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN AS TO WHY THE ENTIRE LOA N AMOUNT OF RS. 40,60,000/- SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE INCOME AS UNEXPLAINED CASH AS THERE IS SERIOUS DOUB T WITH REGARD TO CREDITWORTHINESS OF THE CREDITORS AND GENUINENES S OF THE ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 3 TRANSACTION. THE AO IN THE SAID SHOW CAUSE NOTICE A LSO MENTIONED REASONS FOR UNACCEPTABILITY OF LOANS WITH REGARD TO EACH OF THE LOAN CREDITOR. 4. THE ASSESSEE IN HIS REPLY, HOWEVER, SUBMITTED TH AT THE LOAN TRANSACTIONS ARE GENUINE AND THE LOAN CREDITORS HAV E ADVANCED THE LOAN OUT OF THEIR PAST SAVINGS. IT WAS FURTHER SUBMITTED THAT MOST OF THE LOAN CREDITORS ARE CLOSE RELATIVES AND FRIENDS AND MANY OF THEM ARE CONVENTIONAL FARMERS, WHO DO NOT H AVE BANK ACCOUNTS, AGRICULTURAL RECEIPTS OR BOOKS OF ACCOUNT . IT WAS FURTHER SUBMITTED THAT THOSE PERSONS WERE HAVING AGRICULTUR AL INCOME HAVE THEIR LAND IN RIVER BASINS, WHICH ARE VERY MUC H FERTILE AND IT IS QUITE NORMAL TO GET TWO CROPS PER YEAR AND IT IS QUITE PLAUSIBLE THAT THEY COULD HAVE SAVED SUBSTANTIAL AMOUNT OUT O F THEIR INCOME FROM AGRICULTURAL SOURCES. WITH REGARD TO OT HER LOAN CREDITORS, WHO HAVE STATED TO HAVE BEEN ADVANCED LO AN TO THE ASSESSEE OTHER THAN AGRICULTURE, THE ASSESSEE SUBMI TTED THAT THEY HAVE CONFIRMED OF HAVING ADVANCED THE LOAN OUT OF T HEIR INCOME DERIVED FROM EMBROIDERY WORK ETC. WHICH IS ACCEPTAB LE CONSIDERING THE FACT THAT THEIR EARNINGS ARE TOTALL Y SAVED AS THE HOUSEHOLD EXPENSES ARE BORNE BY THEIR SPOUSES. IT WAS SUBMITTED THAT SO FAR AS NON-MAINTENANCE OF BANK ACCOUNT BY THE LOAN CREDITORS SINCE THEY ARE RESIDING IN RURAL AREAS AN D BEING ILLITERATE PERSONS COULD NOT HAVE PROPER ACCESS AND KNOWLEDGE OF BANKING BUSINESS AND, HENCE, THEY KEPT THEIR SAVINGS IN THE IR HOUSES AND ADVANCED THE MONEY FOR INTEREST. IN VIEW OF THE AFO RESAID FACT, IT WAS SUBMITTED THAT LOAN AMOUNTS MAY BE ACCEPTED AS GENUINE. 5. THE AO AFTER CONSIDERING THE CONTENTIONS RAISED BY THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE H AD NOT SUBMITTED ANY FURTHER EVIDENCES TO PROVE THE CREDIT WORTHINESS AND GENUINENESS OF THE LOAN TRANSACTIONS. HE OPINED THAT THE ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 4 ASSESSEE OTHER THAN REITERATING WHAT THE CREDITORS HAD STATED DURING THEIR EXAMINATION, HAS PRODUCED NO OTHER EVI DENCE TO SUBSTANTIATE CREDITWORTHINESS OR THE GENUINENESS OF THE TRANSACTIONS. THE AO FURTHER NOTED THE FACT THAT TH OUGH THE ASSESSEE HAD STATED THAT THE LOAN AMOUNTS WERE RAIS ED TO MEET COMPULSORY PAYMENTS TOWARDS PROPERTIES, HOWEVER THE FACTS ON RECORD SAY THAT OUT OF 33 LOAN CREDITORS, 17 PERSON S ARE DERIVING INCOME OTHER THAN AGRICULTURE AND ARE RESIDING AT H YDERABAD BUT NONE OF THE SAID PERSONS HAVE PROVIDED ANY EVIDENCE IN THE FORM OF BANK ACCOUNT THAT THEY HAVE CREDITWORTHINESS TO ADVANCE THE LOAN AMOUNTS. HE FURTHER NOTED THAT WITH REGARD TO LOAN ADVANCED BY THE PERSONS WHO ADMITTED OF HAVING INCOME FROM A GRICULTURE HAVE NOT PROVIDED ANY OTHER EVIDENCE WITH REGARD TO THEIR EARNINGS AND THEIR ACCUMULATED SAVINGS. THE AO RELI ED UPON THE DECISION OF THE ITAT IN CASE OF M/S PARAS COLLINS D ISTILLERIES VS. ITO, 2011 007 ITR (TRIB) 614, WHEREIN IT IS HELD TH AT MERE POSSESSION OF LAND BY THE ASSESSEE AND THE CERTIFIC ATE FROM MRO WERE NOT SUFFICIENT TO SUBSTANTIATE THE ASSESSEES CLAIM THAT SOURCE OF INVESTMENT WAS AGRICULTURAL INCOME. THE A O, THEREFORE, CONCLUDED THAT IN ALMOST ALL CASES CREDIT WORTHINES S OF THE CREDITORS HAVE NOT BEEN PROVED AND THE SOURCE FOR T HE LOAN CREDITORS STAND UNEXPLAINED. HENCE, SINCE THE ASSES SEE HAS NOT DISCHARGED THE ONUS OF PROVING THE CREDIT WORTHINES S OF THE LOAN CREDITORS AND GENUINENESS OF THE LOAN TRANSACTION, THE CREDITS SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RET URN OF INCOME REMAINS UNSUBSTANTIATED. THE AO RELYING UPON THE DE CISIONS IN CASE OF I) CIT VS. BIJU PATNAIK (SC) 160 ITR 674 (S C), II) ROSHAN DE HATTI VS. CIT(SC) 107 ITR 938, III) SHANKAR INDU STRIES VS. CIT (CAL) 114 ITR 689, AND IV) HARI CHAND VIRENDER PAUL VS. CIT (P&H) 140 ITR 151, HELD THAT FOR BRINGING THE CASH CREDIT, THE ASSESSEE HAS TO CUMULATIVELY SATISFY ALL THE THREE INGREDIENTS I.E., I) IDENTITY OF THE CREDITORS, II) THEIR CREDIT WORT HINESS, AND III) ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 5 GENUINENESS OF THE TRANSACTION. SINCE THE ASSESSEE APART FROM ESTABLISHING THE IDENTITY OF THE LOAN CREDITORS HAS FAILED TO SATISFY OTHER TWO INGREDIENTS VIZ., CREDITWORTHINESS AND GE NUINENESS, THE LOAN AMOUNT OF RS. 40,60,000/- COULD NOT BE ACCEPTE D AND ACCORDINGLY, HE ADDED BACK THE SAME TO THE INCOME O F THE ASSESSEE AS UNEXPLAINED CASH. 6. THE ASSESSEE BEING AGGRIEVED OF THE ASSESSMENT O RDER, PREFERRED AN APPEAL BEFORE THE CIT(A). 7. IN COURSE OF HEARING OF THE APPEAL BEFORE THE CI T(A), THE ASSESSEE SUBMITTED THAT THE AO NEVER BROUGHT TO THE NOTICE OF THE ASSESSEE WITH REGARD TO NON-SATISFACTION OF THE SOU RCE OF THE LOAN CREDITORS EXCEPT VIDE LETTER DATED 16/12/2011, WHIC H WAS SUITABLY COMPLIED BY THE ASSESSEE BY FURNISHING FACTS WITH R EGARD TO GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINES S OF THE PARTIES. IT WAS CONTENDED THAT THE AO SHOULD HAVE I NVOKED THE POWERS VESTED UNDER THE PROVISIONS OF THE ACT AND S HOULD HAVE EXAMINED FURTHER IN CASE HE WAS NOT SATISFIED ABOUT THE GENUINENESS OF THE TRANSACTION OR CREDIT WORTHINESS OF THE PARTIES. INSTEAD OF DOING THAT THE AO SHOULD NOT HAVE ABRUPT LY REACHED THE CONCLUSION THAT THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTION. IN SUPPORT OF SUCH CONTENTION, THE ASS ESSEE RELIED UPON THE FOLLOWING DECISIONS: 1) CIT VS. P. MOHANAKALA, 291 ITR 278 (SC) 2) CIT VS. SMT. P.K. NOORJAHAN, 237 ITR 570 (SC) 3) SMT. SHANTA DEVI VS. CIT, 171 ITR 532 (P&H) 4) ADDL. CIT VS. HANUMAN AGRAWAL, 151 ITR 150 (PAT .) 5) LABHCHAND BOHRA VS. ITO, 219 CTR (RAJ.) ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 6 8. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT TH E AO BEFORE REJECTING ASSESSEES EXPLANATION SHOULD HAVE ACTED STRICTLY IN ACCORDANCE WITH THE PROVISIONS CONTAINED U/S 68 OF THE ACT, WHICH REFER TO THE FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE CREDITS IN THE BOOKS OF AC COUNT. ONLY WHEN THE AO IS NOT SATISFIED WITH THE EXPLANATION O F THE ASSESSEE, THEN, ADDITION CAN BE MADE U/S 68 OF THE ACT. IT WA S SUBMITTED THAT IN THE PRESENT CASE, IT WAS APPARENT FROM THE ASSESSMENT ORDER THAT THE AO WAS NOT SATISFIED WITH THE EXPLAN ATION SUBMITTED BY THE LOAN CREDITORS BUT NOT THE ASSESSE E. IT WAS SUBMITTED THAT ALL THE CREDITORS NOT ONLY CONFIRMED OF HAVING ADVANCED THE MONEY TO THE ASSESSEE IN CASH IN THEIR DEPOSITION BUT ALSO IN RESPONSE TO SUMMONS U/S 131 THEY HAVE S TATED SO. IT WAS FINALLY CONTENDED THAT THE PROVISIONS OF SECTIO N 68 IS ALSO NOT APPLICABLE TO THE ASSESSEE AS THERE ARE NO BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 9. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS AVAILABLE ON RECORD AS WELL AS IN THE LIGHT OF THE DECISIONS RELIED UPON A LSO HELD THAT THOUGH THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITORS BUT HE HAS FAILED TO PROVE EITHER CREDITWORTHINESS OF THE CREDITORS OR GENUINENESS OF THE TRANSACTIONS. THE CIT(A) HELD THAT EACH OF THE CREDITORS WERE EXAMINED BY THE AO AND ON THE BA SIS OF THE STATEMENTS OF THE CREDITORS THE FINDINGS WERE PUT T O THE ASSESSEE THROUGH SHOW CAUSE NOTICE AND SINCE THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND TO BE UNSATISFACTORY, THEN O NLY, THE AO TREATED THE CREDITS AS UNEXPLAINED. THEREFORE, IT C ANNOT BE SAID THAT THE AO WAS ONLY NOT SATISFIED WITH THE EXPLANA TION OFFERED BY THE CREDITORS AND NOT THE ASSESSEE. THE CIT(A) WENT ON TO HOLD THAT THE ASSESSEE NOT ONLY FAILED TO EXPLAIN THE CR EDITWORTHINESS OF THE CREDITORS BUT HAS ALSO NOT INDICATED REPAYME NT OF THE LOANS ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 7 FOR A LONGER PERIOD AND THERE IS NO INDICATION OF P AYMENT OF INTEREST TO THE CREDITORS. HE FURTHER OBSERVED THAT AS STATED BY THE ASSESSEE THE BORROWALS WERE MADE TO MAKE INVEST MENTS IN PLOTS OF REAL ESTATE FOR WHICH INTEREST FREE FUNDS ARE NOT FREELY AVAILABLE. HE FURTHER HELD THAT FROM THE ENQUIRY MA DE BY THE AO IT BECOMES CLEAR THAT THE CREDITORS AS WELL AS THE ASSESSEE FAILED TO PROVE THE SOURCES FOR LENDING THE AMOUNTS TO THE ASSESSEE ALONG WITH THEIR CAPACITY TO ACCUMULATE THE SAVINGS . THE CIT(A) REFERRED TO THE RATIO LAID DOWN BY THE HONBLE SUPR EME COURT IN THE CASE OF SUMATI DAYAL VS. CIT, 215 ITR 801 WHERE IN IT IS HELD THAT NOT ONLY THE CREDITWORTHINESS OF THE CREDITOR, THE ELEMENT OF HUMAN PROBABILITY ARE ALSO TO BE TAKEN INTO CONSIDE RATION. IN THE LIGHT OF ABOVE RATIO OF THE HONBLE SUPREME COURT, IT WAS OBSERVED BY THE CIT(A) THAT IT IS IMPROBABLE TO THI NK THAT THE CREDITORS WITH THEIR MEAGER MEANS OF INCOMES AND TH E SOURCES COULD GIVE HUGE LOANS TO THE ASSESSEE WITHOUT CHAR GING ANY INTEREST FOR YEARS TOGETHER. HE FURTHER OBSERVED TH AT FROM THE STATEMENTS RECORDED FROM THE CREDITORS, IT IS CLEAR THAT THEY WERE NOT IN A POSITION TO RECOLLECT THE AMOUNTS OF THE L OAN GIVEN BY THEM TO THE ASSESSEE AND THE RECEIPT OF THE AMOUNTS BACK FROM THE ASSESSEE. THEREFORE, APPLYING THE TEST OF HUMAN PROBABILITY IT BECOMES CLEAR THAT THERE IS NO NECESSITY FOR LENDIN G HUGE AMOUNTS TO A PERSON WHO IS WELL-OFF THAN THE CREDIT ORS THEMSELVES AND WITHOUT CHARGING ANY INTEREST FOR YEARS TOGETH ER THAT TOO FOR MAKING THE INVESTMENTS. THE CIT(A), THEREFORE, CONC LUDED THAT THE AO IS JUSTIFIED IN TREATING THE LOAN CREDITORS AS UNEXPLAINED CASH CREDITS IN THE ABSENCE OF ENOUGH INFORMATION O R EVIDENCE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF CREDITORS APART FROM PROVING TH E SAME FROM THE POINT OF VIEW OF HUMAN PROBABILITY, IN ESTABLIS HING SUCH LOAN TRANSACTIONS. ACCORDINGLY, THE CIT(A) CONFIRMED THE ADDITION OF RS. 40,60,000/-. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 8 10. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 11. THE LEARNED AR BEFORE US SUBMITTED THAT NOT ONL Y THE EACH OF THE LOAN CREDITOR HAVE CONFIRMED OF HAVING ADVAN CED THE LOAN BUT THE AO IN COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF HAD CONDUCTED INDEPENDENT ENQUIRY BY ISSUING SUMMONS TO ALL THE LOAN CREDITORS AND THE LOAN CREDITORS ALSO APPEARED BEFORE THE AO AND IN THE STATEMENT RECORDED FROM THEM THEY CATEGO RICALLY ADMITTED OF HAVING ADVANCED THE LOAN AMOUNTS TO THE ASSESSEE. IT WAS SUBMITTED THAT AT THE TIME OF THEIR EXAMINATION , THE AO NEVER RAISED ANY DOUBT WITH REGARD TO THE CREDITWORTHINES S OF THE CREDITORS AND SURPRISINGLY AFTER ONE MONTH OF RECOR DING STATEMENT, THE AO ISSUED SHOW CAUSE NOTICE EXPRESSING HIS DOUB T OVER THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTION. IT WAS SUBMITTED THAT THE ASSESSEE HAV ING PROVED THE IDENTITY OF THE CREDITORS AND ALSO HAVING SUBMITTED CONFIRMATION LETTERS OF CREDITORS ADMITTING ADVANCING OF LOANS, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINE SS OR GENUINENESS OF THE TRANSACTION. IT IS FURTHER SUBMI TTED THAT THE CREDITORS ALSO APPEARED BEFORE THE AO AND CATEGORIC ALLY STATED THAT HAVING ADVANCED THE LOANS TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE AO CANNOT DISBELIEVE THE STATEME NTS OF THE CREDITORS AND EXPECT THE ASSESSEE TO PROVE THE SOUR CE OF SOURCE, WHICH IS NOT A REQUIREMENT FOR PROVING CASH CREDITS . IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR APART FROM RELYING UPON A DECISIONS CITED BEFORE THE CIT(A) ALSO RELIED ON TH E DECISION OF HONBLE CHATTISHGARH HIGH COURT IN CASE OF CIT VS. ABDUL AZIZ [2012] 72 DTR 216 AND DECISION OF ITAT, LUCKNOW BEN CH IN CASE OF ITO VS. SHIVAKUMAR IN ITA NO. 398/LKW/2012, DAT ED 25/04/2013. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 9 12. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE ORDERS OF THE REVENUE AUTHORITIES SUBMITTED THAT FA CTS ON RECORD ESTABLISH THAT THE ASSESSEE HAS MISERABLY FAILED TO PROVE CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINEN ESS OF THE TRANSACTION, HENCE, CASH CREDIT HAVING REMAINED UNE XPLAINED, IT HAS BEEN RIGHTLY ADDED U/S 68 OF THE ACT. IN SUPPOR T OF SUCH CONTENTION, THE LEARNED DR RELIED UPON THE FOLLOWIN G DECISIONS: 1. PV AJAY NARAYAN VS. ITO, 57 TTJ 159 2. R.B. MITTAL VS. CIT, 246 ITR 283 3. M/S PARAS COLLINS DISTILLERIES VS. ITO, 7 ITR ( TRIB.) 614 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WE LL AS OTHER MATERIAL ON RECORD INCLUDING DOCUMENTS SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK. WE HAVE ALSO APPLIED O UR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES. DURING TH E FY 2008-09 RELEVANT TO THE IMPUGNED AY, THE ASSESSEE IN HIS BA LANCE SHEET REFLECTED THE FOLLOWING UNSECURED LOANS AMOUNTING T O RS. 40,60,000/-: S.NO. NAME OF THE PERSON AMOUNT IN RS. 1. R. BHIMA RAJU 2,00,000/ - 2. R. SRINIVAS RAJU 1,50,000/ - 3. R. GEETHA 1,50,000/ - 4. INAMPUDI PARVATHI 1,50,000/ - 5. INAMPUDI SATYANARAYANA RAJU 1,00,000/ - 6. R. DEEPA 1,00,000/ - 8. PERUCHARLA VANI 2,00,000/ - 9. PERUCHARLA NAGARAJU 1,00,000/ - 10. MUDUNURI PRAMILA RANI 60,000/ - 11. RUDRAJU SURYANARAYANA RAJU 1,50,000/ - 12. R. VENKATA NARASHIMA RAJU 1,00,000/ - 13. PERCHARLA LAXMI 1,00,000/ - 14 . PERCHARLA SRIHARI RAJU 1,40,000/ - 15. P. SEETHAMMA 1,50,000/ - 16. P. SATYANARAYANA RAJU 50,000/ - 17. BOOPATHI RAJU GOPAL 2,00,000/ - 18. BHOOPATHI RAJU LAXMI 1,50,000/ - ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 10 19. BHOPATHI RAJU MADHUVARMA 50,000/ - 20. EMMADI ANITHA 1,50,000/ - 21. EMMADI RAVINDAR 1,00,000/ - 22. KATARI VENKATA RAJU 1,00,000/ - 23. KATARI ANASUYA 1,00,000/ - 24. TOTAKURA BEBISAROJINI 1,10,000/ - 25 KOSURI SATYANARAYANA RAJU 1,25,000/ - 26. KOSURI KRISHNA VENI 1,25,000/ - 27. INDUKURI SATYANARAYANA RAJU 1,25,000/ - 28. INDUKURI JYOTHI 1,25,000/ - 29. PENIMECHI USHARANI 1,20,000/ - 30. BYRAJU NARASHIMHARAJU 1,35,000/ - 31. DANDU VENKATA SHIVANAGARAJU 1,00,000/ - 32. DANDU SURYANARAYANA 1,35,000/ - 33. KOSURI RAMARAJU 1,15,000/ - 34. KOSURI BHARATHI 95,000/ - 14. THOUGH IT IS A FACT THAT THE AFORESAID PERSONS CONFIRMED OF HAVING ADVANCED LOANS AND ALSO WERE EXAMINED BY THE AO WHEREIN THEY ALSO ADMITTED OF HAVING ADVANCED THE L OAN, HOWEVER, GOING THROUGH THE OBSERVATIONS MADE BY THE AO IN RESPECT OF EACH OF THE LOAN CREDITOR IT CAN BE SEEN THAT LOAN CREDITORS APPEARING IN S.NOS. 1, 2, 4, 5, 6, 7, 9, 11, 12, 13, 14, 15, 17, 20, 25, 32, AND 33 STATED TO HAVE DERIVED I NCOME FROM AGRICULTURE OUT OF THEIR AGRICULTURAL LAND HOLDING AND HAVE ADVANCED THE LOAN FROM PAST SAVINGS MADE OUT OF THE AGRICULTURAL INCOME. NONE OF THESE PERSONS ARE EITHER INCOME-TAX ASSESSEES OR HAVING PAN. MOST OF THEM ALSO STATED TO HAVE NOT BE EN MAINTAINING ANY BANK ACCOUNT AND COULD NOT PRODUCE ANY BILLS OR VOUCHERS WITH REGARD TO THE EARNING OF AGRICULTURAL INCOME. THE LOAN CREDITOR APPEARING IN S.NO. 3 STATED TO HAVE D ERIVED INCOME FROM TAILORING AND HAVING NET INCOME FROM THAT SOUR CE AT RS. 12,000/-. HOWEVER, AS PER THE REMARK MADE BY THE AO RATION CARD REVEALS THAT THE FAMILY OF THE SAID PERSON INCLUDIN G 3 MEMBERS IS HAVING ANNUAL INCOME OF RS. 20,000/- ONLY. THE SAID PERSON IS NOT ASSESSED TO TAX NOR HAVING PAN. SIMILARLY, THE PERS ON APPEARING S.NO. 8, THOUGH, STATED TO HAVE ADVANCED THE AMOUNT OF RS. 2 LAKHS FROM PAST SAVINGS BUT DOES NOT HAVE ANY SOURC E OF INCOME ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 11 NOR BANK ACCOUNT. THERE IS ALSO NO OTHER EVIDENCE T O SHOW THAT SHE HAD EARNED INCOME IN THE PAST FROM WHICH SAVING S HAVE BEEN MADE. SIMILARLY THE PERSON AT S.NO. 10 IS STATED TO HAVE DERIVED INCOME FROM TAILORING AND IS HAVING ONLY INCOME OF RS. 15,000/-. HOWEVER, NO EVIDENCE FOR EARNING THE INCOME COULD B E PRODUCED. THE LOAN CREDITOR AT S.NO. 16 STATED TO HAVE DERIVE D INCOME FROM DAIRY ACTIVITIES AND HAVING A NET INCOME OF RS. 45, 000/-. HOWEVER, HE ALSO COULD NOT PRODUCE ANY PROOF WITH R EGARD TO THE DAIRY ACTIVITIES AND NO BANK ACCOUNT IS MAINTAINED. HOWEVER, IN THE RATION CARD INCOME MENTIONED IS ONLY RS. 15,00 0/- ANNUALLY. THE LOAN CREDITOR APPEARING AT S.NO. 18 ALSO DID NO T FURNISH ANY EVIDENCE WITH REGARD TO THE CLAIM MADE BY HIM OF EA RNING RS. 30,000/- ONLY IN DAIRY ACTIVITIES WHEREAS THE RATIO N CARD DISCLOSES HIS ANNUAL INCOME AT RS. 15,000/-. THE PERSON APPEA RING AT S. NO. 19, WHO STATED TO HAVE ADVANCED AN AMOUNT OF RS . 50,000/- IS PURSUING HIS MCA STUDIES AND SAID TO HAVE MADE L OAN ADVANCE OUT OF HIS SAVINGS. THE LOAN CREDITOR APPEARING UND ER S.NO. 21 WHO STATED TO HAVE ADVANCED RS. 1 LAKH WAS FOUND TO BE A PERSON SUFFERING FROM PARALYSIS AND COULD NOT PRODUCE ANY SOURCE FOR ADVANCING LOAN. SIMILARLY, THE PERSON IN S.NO. 22, WHO STATED TO HAVE ADVANCED RS. 1 LAKH WAS EARLIER WORKING IN GOL DSTONE INFRATECH CO. AND THE ENTIRE LOAN AMOUNT WAS ADVANC ED IN CASH. HE FURTHER STATED THAT THE LOAN WAS ADVANCED OUT OF PAST SAVINGS AND WITHDRAWALS MADE FROM BANK. HOWEVER, NO BANK AC COUNT COPY WAS SUBMITTED IN SUPPORT OF SUCH CLAIM. THE CREDITO R APPEARING IN S.NO. 23, WHO HAD ADVANCED LOAN OF RS. 1 LAKH WAS W ORKING IN VOLTAS CO. TILL 1997 AND AT PRESENT IS ONLY A HOUSE WIFE AND HAVING NO ANNUAL INCOME. HOWEVER, SHE STATED THAT T HE AMOUNT OF RS. 1 LAKH WAS ADVANCED OUT OF PAST SAVINGS, HOWEVE R, NO PROOF WAS SUBMITTED IN SUPPORT OF SUCH CLAIM. THE CREDIT OR AT S.NO. 24, WHO STATED TO HAVE ADVANCED RS. 1.10 LAKH IS A PER SON RECEIVING PENSION OF RS. 3,000/- PER MONTH. THOUGH HE MAINTAI NED BANK ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 12 ACCOUNT BUT THE LOAN AMOUNT WAS STATED TO HAVE BEEN ADVANCED IN CASH. EXAMINATION OF THE BANK ACCOUNT REVEALED THAT SUFFICIENT BALANCES ARE NOT AVAILABLE AS ON THE DATE OF ADVANC E MADE. THE LOAN CREDITOR AT S.NO. 26, WHO STATED TO HAVE ADVAN CED AN AMOUNT OF RS. 1.25 LAKH WAS DERIVING INCOME FROM TA ILORING WITH ANNUAL NET INCOME OF RS. 45,000/-. HOWEVER, SHE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF SUCH CLAIM. THE RATION C ARD COPY REVEALED HER ANNUAL INCOME AT RS. 17,000/-. THE LO AN CREDITOR AT S.NO. 27, WHO STATED TO HAVE ADVANCED RS. 1.25 LAKH WAS DERIVING INCOME AS A MECHANIC OF TRACTORS. HOWEVER, HE DID N OT PRODUCE ANY EVIDENCE IN SUPPORT OF EARNING OF HIS INCOME. T HE LOAN CREDITOR AT S.NO. 28 ALSO STATED TO HAVE ADVANCED L OAN OF RS. 1.25 LAKH OUT OF PAST SAVINGS FROM INCOME DERIVED FROM T AILORING BUSINESS. HOWEVER, NO EVIDENCE WAS PRODUCED IN SUPP ORT OF SUCH CLAIM. THE LOAN CREDITOR APPEARING UNDER S.NO. 29, WHO STATED TO HAVE ADVANCED RS. 1.20 LAKH WAS WORKING AS TEACHER IN A SCHOOL. IT WAS FOUND THAT THOUGH HE MAINTAINED A BANK ACCOU NT BUT THE ADVANCES WERE MADE IN CASH AND THE COMPLETE BANK AC COUNT WAS NOT SUBMITTED. THE PERSON IN S.NO. 30, WHO STATED T O HAVE ADVANCED RS. 1.35 LAKH DERIVING INCOME FROM WORKING AS DRIVER. HOWEVER, NO EVIDENCE TO SUBSTANTIATE HIS PAST SAVIN GS WERE PRODUCED. THE LOAN CREDITOR APPEARING IN S.NO. 31, WHO STATED TO HAVE ADVANCED OF RS. 1 LAKH ADMITTED OF WORKING AS SALES EXECUTIVE FOR A SALARY OF RS. 7500/- PER MONTH. HOW EVER, NO EVIDENCE AND NO BANK ACCOUNT WAS PRODUCED IN SUPPOR T OF INCOME CLAIMED TO HAVE BEEN EARNED BY HIM. THE PERSON APPE ARING IN S.NO. 34, WHO CLAIMED TO HAVE ADVANCED AN AMOUNT OF RS. 95,000/- SAID TO HAVE DERIVED INCOME FROM EMBROIDER Y WORKS AND ONLY INCOME OF RS. 36,000/- ANNUALLY WAS SSHOWN. HO WEVER, NO EVIDENCE WAS PRODUCED TO SHOW THAT ACTUALLY SHE WAS EARNING SUCH INCOME. IT IS FURTHER SEEN FROM RECORD THAT W HEN THESE FACTS WERE SPECIFICALLY BROUGHT TO THE NOTICE OF THE ASSE SSEE AND THE AO ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 13 REQUIRED HIM TO EXPLAIN, THE ASSESSEE APART FROM RE ITERATING THAT LOAN CREDITORS HAVE ADVANCED THE LOAN AMOUNT DID NO T PRODUCE ANY OTHER EVIDENCE TO PROVE THE CREDITWORTHINESS OF CREDITORS OR GENUINENESS OF THE TRANSACTIONS. IT IS ALSO A FACT ON RECORD THAT NONE OF THE LOAN CREDITORS ARE INCOME-TAX ASSESSEES OR HAVING PAN. IN THESE CIRCUMSTANCES, A HEAVY BURDEN IS CAST UPON THE ASSESSEE TO PROVE WITH CLINCHING EVIDENCE THAT THE LOAN TRANSACTIONS ARE GENUINE. 15. IT IS ALSO A FACT ON RECORD THAT, THOUGH THE A SSESSEE IN HIS REPLY HAD STATED THAT LOANS WERE ADVANCED BY THE LO AN CREDITORS FOR INTEREST, HOWEVER, IT IS FOUND THAT NEITHER LO AN AMOUNTS HAVE BEEN REPAID TO THE CREDITORS NOR ANY INTEREST HAVE BEEN PAID TO THEM ON THE LOAN AMOUNTS. IN THESE CIRCUMSTANCES, G ENUINENESS OF THE LOAN TRANSACTION CERTAINLY LEAVES A LOT TO B E DESIRED. FROM THE ENQUIRY MADE BY THE AO IN RESPECT OF EACH OF TH E LOAN CREDITORS AS REFLECTED IN THE ASSESSMENT ORDER DOES ESTABLISH THE FACT THAT NONE OF THEM HAVE CREDITWORTHINESS TO ADV ANCE THE LOAN AMOUNT TO THE ASSESSEE. EVEN IT IS QUITE SURPRISING FACT THAT THOUGH SOME OF THE LOAN CREDITORS ADMITTED OF HAVIN G MAINTAINED BANK ACCOUNT BUT THEY CHOSE TO ADVANCE THE LOAN AMO UNT IN CASH, WHICH IS CERTAINLY NOT ACCEPTABLE. IT IS WELL SETTL ED PRINCIPLE OF LAW AS PER THE VIEW EXPRESSED BY THE HONBLE SUPREME CO URT AS WELL AS DIFFERENT HIGH COURTS, THE DUTY IS CAST UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE LOAN TRANSACTION BY ES TABLISHING THE THREE INGREDIENTS CUMULATIVELY, WHICH ARE, IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IN THE FACTS OF THE PRESENT CASE, IT IS QUITE PATENT AND OBVIOUS FROM THE FACTS AND MATERIALS ON RECORD THAT THE ASSESSEE HAS NOT P RODUCED ADEQUATE MATERIAL TO PROVE EITHER CREDITWORTHINESS OF THE PERSONS NOR GENUINENESS OF THE TRANSACTION. THE AO CERTAINL Y CANNOT BE EXPECTED TO ACCEPT ANY EXPLANATION SUBMITTED BY THE ASSESSEE AS ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 14 A GOOD EXPLANATION UNLESS IT IS BACKED BY SUFFICIEN T EVIDENCE. HOWEVER, THE CONTENTION OF THE LEARNED AR THAT SINC E THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT, THEREFORE, PROVISIONS OF SECTION 68 IS NOT APPLICABLE, IS TOO TECHNICAL A AR GUMENT TO BE ACCEPTED. IT IS A FACT ON RECORD THAT IN THE BALANC E SHEET FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAD D ISCLOSED UNSECURED LOAN OF RS. 40,60,000/-. THE LOAN TAKEN H AS ALSO NOT BEEN DISPUTED BY THE ASSESSEE. IN THESE CIRCUMSTANC ES, IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 68 OF THE AC T IS NOT ATTRACTED. 16. SO FAR AS THE DECISIONS RELIED UPON BY THE ASSE SSEE ARE CONCERNED, IT HAS TO BE OBSERVED THAT A DECISION IS RENDERED IN THE CONTEXT OF THE FACTS INVOLVED IN THAT PARTICULA R CASE AND CANNOT BE APPLIED UNIFORMLY TO EVERY CASE UNLESS TH E FACTS ARE IDENTICAL. IN THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE DECISIONS RELIED UPON BY THE ASSESSEE ARE NOT A PPLICABLE THOUGH THERE IS NO DISPUTE TO THE RATIO LAID DOWN I N THOSE DECISIONS. ON THE CONTRARY, THE JURISDICTIONAL HIG H COURT IN CASE OF R.B. MITTAL VS. CIT, 246 ITR 283 HELD THAT IN OR DER TO DISCHARGE ONUS CAST ON THE ASSESSEE U/S 68 OF THE ACT, IT IS NOT ONLY REQUIRED TO ESTABLISH IDENTITY OF THE CREDITORS AND CONFIRMATION OF THE CREDITS BUT ALSO CAPACITY OF THE CREDITORS TO A DVANCE MONEY AS WELL AS GENUINENESS OF THE TRANSACTION. SAME VIEW H AS ALSO BEEN EXPRESSED BY THE HONBLE SUPREME COURT IN CASE OF SUMATI DAYAL VS. CIT, 214 ITR 801 (SC) WHEREIN THE APEX COURT HE LD THAT IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT TH E NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE AO, NOT SA TISFACTORY. SINCE THE ASSESSEE HAS FAILED TO PROVE CREDITWORTHI NESS AND ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 15 GENUINENESS OF THE TRANSACTION, IN OUR VIEW, THE RE VENUE AUTHORITIES WERE JUSTIFIED IN TREATING THE LOAN AMO UNT OF RS. 40,60,000/- AS UNEXPLAINED CASH OF THE ASSESSEE. AC CORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF T HE CIT(A), WHICH IS ACCORDINGLY SUSTAINED. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17. THE NEXT ISSUE IS WITH REGARD TO RESTRICTING TH E AGRICULTURAL INCOME TO AN AMOUNT OF RS. 1,68,000/- OUT OF TOTAL AGRICULTURAL INCOME DECLARED OF RS. 10,86,000/-. 18. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD DECLARED AGRICULTU RAL INCOME OF RS. 10,86,000/- FOR THE IMPUGNED ASSESSMENT YEAR. H E, THEREFORE, CALLED UPON THE ASSESSEE TO PROVIDE DETA ILS OF THE SAID INCOME VIDE QUESTIONNAIRE ISSUED ON 11/07/2007. FRO M THE STATEMENT OF AGRICULTURAL INCOME SUBMITTED BY THE A SSESSEE IN RESPONSE TO THE QUESTIONNAIRE ISSUED, THE AO NOTICE D THAT THE ASSESSEE HAD ALSO DERIVED INCOME FROM FISH PONDS. T HE AO BEING OF THE VIEW THAT INCOME FROM FISH PONDS IS NOT AGRI CULTURAL INCOME AGAIN ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 16/12/2011 REQUIRING THE ASSESSEE TO EXPLAIN AS TO WHY THE AMO UNT OF RS. 7,50,000/- CLAIMED AS INCOME FROM FISH PONDS SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES AS IT IS NOT A GRICULTURAL INCOME IN VIEW OF THE DECISION OF THE ITAT HYDERABA D BENCH IN CASE OF KARRA JAYABHARATHI VS. ITO, ITA NO. 48/HYD/ 2004. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUB MITTED THAT OUT OF FOUR FISH PONDS ONLY TWO FISH PONDS WERE YIE LDING IN A PARTICULAR YEAR WHICH ARE MUCHERLA PONDS OF 1.08 AN D 2.11 ACRES AND REMAINING TWO CAME INTO BEING IN THE FY 2009-10 . HENCE INCOME OF RS. 10,86,000/- BIFURCATED AS RS. 3,76,00 0/- FROM FISH CULTIVATION AND RS. 7,10,000/- FROM OTHER AGRICULTU RAL PRODUCE. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 16 19. FROM THE REPLY SUBMITTED BY THE ASSESSEE, THE A O CONCLUDED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTIONS WIT H REGARD TO THE TREATMENT OF INCOME FROM FISH PONDS AS INCOME FROM OTHER SOURCES. THE ASSESSEE HAD ONLY OBJECTED WITH REGARD TO THE AMOUNT OF INCOME TO BE CONSIDERED AS INCOME FROM FI SH PONDS AND INCOME FROM CORE AGRICULTURAL ACTIVITIES. THE AO ON EXAMINING THE DETAILS OF AGRICULTURAL LAND SUBMITTED IN A STATEME NT NOTICED THAT FISH PONDS AT MUCHERLA VILLAGE WERE PURCHASED BY DO CUMENT NO. 325/07 ADMEASURING 2.11 ACRES, DOCUMENT NO. 323/200 7 ADMEASURING 5.83 ACRES AND 324/2007 ADMEASURING 1.0 8 ACRES AND THE COPIES OF THE DOCUMENTS WERE ALSO SUBMITTED . HE FURTHER NOTICED THAT AS PER THE DOCUMENTS FISH PONDS WERE P URCHASED DURING THE SAME YEAR AND ON THE SAME DATE I.E. 22/0 3/2007. THE OTHER FISH POND WAS PURCHASED VIDE THE DOCUMENT NO. 1366/2008 ON 13/10/2008 ADMEASURING 5.58 ACRES. THE AO ON THE BASIS OF THE AFORESAID DOCUMENTS CONCLUDED THAT INCOME FROM FISH PONDS FOR THE YEAR EACH RS. 7,50,000/-. SO FAR AS AGRICUL TURAL INCOME OF RS. 3,36,000/- IS CONCERNED, THE AO ALSO TREATED IT AS INCOME FROM OTHER SOURCES AS THE ASSESSEE HAD NOT SUBMITTE D ANY EVIDENCES WITH REGARD TO THE AGRICULTURAL PRODUCE G ROWN AND SOLD AND ALSO BILLS AND VOUCHERS FOR THE EXPENDITURE INC URRED. 20. THE ASSESSEE BEING AGGRIEVED, PREFERRED AN APPE AL BEFORE THE CIT(A). 21. THE CIT(A) ON EXAMINING THE FACTS AND MATERIALS ON RECORD FOUND THAT SO FAR AS THE FISH PONDS ARE CONCERNED, THE ASSESSEE HAD RELIED UPON THE PROCEEDINGS OF THE DISTRICT COL LECTOR TO SHOW THAT THERE IS NO SUCH INCOME FROM FISH PONDS AND TH E CLAIM MADE IN THE RETURN OF INCOME ON THAT ACCOUNT IS DUE TO M ISTAKE COMMITTED BY THE ACCOUNTANT OF THE ASSESSEE. THE CI T(A) ON PERUSAL OF THE COPY OF THE PROCEEDINGS OF THE COLLE CTOR, KRISHNA ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 17 DISTRICT, DATED 30/08/2008, NOTICED THAT FISH PONDS OF THE ASSESSEE WERE REGULARIZED TO THE EXTENT OF ACRE 14. 71 CENTS AND THE PROCEEDINGS CLEARLY INDICATE THAT THE REGULARIZ ATION WAS FOR THE EXISTING FISH PONDS. HE, THEREFORE, WAS OF THE VIEW THAT THE FISH PONDS WERE IN OPERATION BEFORE THE DATE OF 30/ 08/2008. HE, THEREFORE, REJECTED THE ASSESSEES CONTENTION THAT THE FISH PONDS WERE NOT IN OPERATION DURING THE ASSESSMENT YEAR IN DISPUTE. HE FURTHER NOTICED THAT THOUGH THE ASSESSEE HAS CLAIME D THAT THE AREA OF FISH POND AT MUCHERLA VILLAGE WAS AC. 1.08 WHEREAS THE PROCEEDING OF THE DISTRICT COLLECTOR, KURNOOL DISTR ICT WERE IN TOTAL VARIANCE WITH THE CLAIM OF THE ASSESSEE. HE, THEREF ORE, UPHELD THE ORDER OF THE AO IN TREATING INCOME OF RS. 7,50,000/ - AS INCOME FROM FISH PONDS AND TREATED AS INCOME FROM OTHER SO URCES BY RELYING ON THE DECISION OF THE ITAT, HYDERABAD BENC H IN THE CASE OF KARRA JAYA BHARATHI VS. ITO (SUPRA). SO FAR AS T HE AGRICULTURAL INCOME OF RS. 3,36,000/- IS CONCERNED, THE CIT(A) T HOUGH ACCEPTED THE FACT THAT THE ASSESSEE IS THE OWNER OF AGRICULTURAL LAND BUT HE WAS OF THE VIEW THAT MERE POSSESSION OF LAND BY THE ASSESSEE WAS NOT ENOUGH TO INDICATE THAT THE ASSESS EE WAS EARNING AGRICULTURAL INCOME. IN THIS CONTEXT, HE RE LIED ON THE DECISION OF ITAT, HYDERABAD IN THE CASE OF M/S PARA S COLLINS DISTILLERIES VS. ITO, [2011] 7 ITR (TR.B) 614. THE CIT(A) FURTHER CONCLUDED THAT SINCE THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM OF AGRICULTURAL INCOME, T HE AO WAS JUSTIFIED IN REJECTING SUCH CLAIM. THE CIT(A), HOWE VER, CAME TO HOLD THAT AGRICULTURAL INCOME CANNOT BE REJECTED IN ITS ENTIRETY BUT 50% OF RS. 3,36,000/- CAN BE REASONABLY CONSIDERED TO BE INCOME FROM AGRICULTURE. ACCORDINGLY, HE TREATED THE AMOU NT OF RS. 1,68,000/- AS INCOME FROM AGRICULTURE AND THE BAL ANCE AMOUNT WAS TREATED AS INCOME FROM OTHER SOURCES. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 18 22. THE LEARNED AR MORE OR LESS REITERATED THE STAN D TAKEN BEFORE THE LOWER AUTHORITIES AND SUBMITTED THAT PER MISSION WAS ACCORDED TO REGULARIZE EXISTING FRESH WATER AQUACUL TURE, WHICH IS MANDATORILY REQUIRED BEFORE SEEDING THE FISH WAS O NLY GRANTED IN AUGUST, 2008. THEREAFTER, THE SEEDING OF THE FISH I S DONE AND THE SEEDS IN FISH POND TAKES A MINIMUM OF 12 TO 15 MONT HS TIME TO GROW IN TO COMMERCIALLY SALEABLE FISH. THEREFORE, T HERE CANNOT BE ANY INCOME FROM FISH PONDS DURING THE IMPUGNED ASSE SSMENT YEAR, WHICH CAN BE EVIDENCED BY THE COLLECTOR. HENC E, THE AMOUNT OF RS. 7,50,000/- CANNOT BE TREATED AS INCOME FROM FISH PONDS. SO FAR AS, RESTRICTING THE AGRICULTURAL INCOME TO R S. 1,68,000/-, THE LEARNED AR SUBMITTED THAT IN EARLIER ASSESSMENT YEARS ALSO, THE ASSESSEE HAD SHOWN SUBSTANTIAL AMOUNT FROM AGRI CULTURAL INCOME AND IT HAS BEEN ACCEPTED. THEREFORE, THE AO IS NOT JUSTIFIED TO TREAT THE AGRICULTURAL INCOME AS INCOM E FROM OTHER SOURCES WITHOUT BRINGING SUFFICIENT MATERIAL ON REC ORD TO SHOW THAT NO SUCH AGRICULTURAL INCOME WAS AVAILABLE TO T HE ASSESSEE. IN THIS CONTEXT, THE LEARNED AR RELIED UPON A DECISION OF THE ITAT IN CASE OF CIT VS. DEVILALSON [2001] 70 TTJ (JD) 24. 23. THE LEARNED DR, ON THE OTHER HAND, RELIED ON TH E ORDER OF THE CIT(A). 24. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIALS ON RECORD. IT IS A FACT ON RECORD THA T THE ASSESSEE HIMSELF IN THE DETAILS SUBMITTED BEFORE THE AO ADMI TTED RS. 7,50,000/- TO BE FROM FISH PONDS AND RS. 3,36,000/- FROM AGRICULTURAL INCOME. HOWEVER, IT IS SUBSEQUENTLY CL AIMED BY THE ASSESSEE THAT THE INCOME FROM FISH PONDS HAVE BEEN MISTAKENLY SHOWN AS RS. 7,50,000/- IN STEAD OF RS. 3,36,000/- AND THE INCOME FROM AGRICULTURE IS RS.7,50,000/-. THE LEARN ED AR HAD FURTHER SUBMITTED THAT DURING THE RELEVANT AY FISH PONDS WHICH ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 19 HAVE GIVEN YIELD ADMEASURING ACRES 1.08 AND 2.11 AN D THE REMAINING TWO FISH PONDS CAME INTO BEING ONLY IN FY 2009-10. HOWEVER, THE PROCEEDING DATED 30/08/2008 BEFORE THE DISTRICT COLLECTOR AND CHAIRPERSON, A COPY OF WHICH IS AT PA GE 5 OF THE PAPER BOOK CLEARLY REVEALS THAT IT IS A PERMISSION GRANTED FOR REGULARIZATION OF EXISTING FRESH WATER AQUACULTURE FARM IN A TOTAL EXTENT OF AC. 14.71 CTS. THEREFORE, THE ASSESSEES CLAIM THAT ONLY 2 PONDS 1.08 AND 2.11 ACRES WERE FISH YIELDING IS W ITHOUT ANY BASIS. THE PROCEEDING BEFORE THE COLLECTOR FURTHER PROVES THE FACT THAT THE ASSESSEE WAS CARRYING ACTIVITY OF FISH IN THE EXISTING PONDS AS IN CASE OF THE ASSESSEE IT IS ONLY REGULAR IZATION OF THE EXISTING PONDS AND NOT PERMISSION FOR SETTING UP A NEW AQUA WATER FARM. IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) IN SUSTAINING THE ADDITION OF RS. 7,50,000/- AS INCOME FROM OTHER SOU RCES. HOWEVER, SO FAR AS THE AGRICULTURAL INCOME OF RS. 3 ,36,000/- IS CONCERNED, ON PERUSAL OF THE ORDER PASSED BY THE CI T(A) IT CAN BE SEEN THAT THE CIT(A) HAS ACCEPTED THE FACT THAT THE ASSESSEE IS OWNER OF AGRICULTURAL LAND AND IT IS LOCATED IN A W ELL IRRIGATED DISTRICT OF GODAVARI AND HENCE AVAILABILITY OF AGRI CULTURE CANNOT BE RULED OUT. HOWEVER, HE HAS RESTRICTED THE AMOUNT TO RS. 1,68,000/- ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED EVIDENCE TO SUBSTANTIATE ITS CLAIM. IN OUR VIEW, TH E CIT(A) NOT JUSTIFIED IN RESTRICTING THE AGRICULTURAL INCOME TO RS. 1,68,000/-, WHEN HE HAS ACCEPTED THE FACT THAT THE ASSESSEE IS OWNER OF AGRICULTURAL LAND AND THE AGRICULTURAL LAND IS SITU ATED IN A WELL IRRIGATED AREA THE CLAIM OF AGRICULTURAL INCOME CAN NOT BE ARBITRARILY REJECTED OR RESTRICTED WITHOUT BRINGING MATERIAL ON RECORD THAT INCOME FROM AGRICULTURE FROM THOSE LAND WOULD BE RS. 1,68,000/-. IN THE AFORESAID VIEW OF THE MATTER, WE DIRECT THE AO TO TREAT THE AMOUNT OF RS. 3,36,000/- AS INCOME FRO M AGRICULTURE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. ITA NO. 396/HYD/2013 SRI PERICHERLA SHIVAKUMAR RAJU 20 25. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT 13/09/2013. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED:13 TH SEPTEMBER, 2013. KV COPY TO:- 1) SRI PERICHERLA SHIVAKUMAR RAJU, C/O M/S. ANJANEY ULU & CO., CAS., 30, BAGHYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080. 2) ITO, WARD 11(4), HYDERABAD. 3) CIT(A)-VI, HYDERABAD. 4) CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T ., HYDERABAD.